Tuesday, April 23, 2013

The Labour-Greens proposal to restructure the electricity market would put a $100 million dent in Mighty River Power's operational earnings, says financial research house Morningstar.

In a report issued today, Morningstar said the plan, which would introduce a single buyer of electricity which would then be on-sold to competing retailers, was one of the biggest risks hanging over the firm.

MRP produced earnings (before interest, tax, depreciation, amortisation and fair value movements) of $461.5m in 2012 financial year, meaning the NZ Power move would equate to a 21.7 per cent reduction.

Of course, that's also $100 million a year they're currently gouging out of us in oligopoly profits. But strangely, the analysts aren't too interested in that. They don't care about ordinary kiwis paying too much for electricity, or businesses facing higher costs (and therefore being less able to pay decent wages) because of our dysfunctional electricity market. All they care about is the return to the tiny shareholding elite who benefit from this dysfunction.

These profits are gained by an abuse of market position to extort higher prices than there would be in a truly competititve and properly regulated market. They should be returned to Mighty River's customers. Labour and the Greens will return them; National won't. I think that's a clear choice for election day.